"Media accounts earlier this summer raised serious concerns about the City of Allentown School District's transparency in business dealings," said Pennsylvania Auditor General Eugene DePasquale.

PROVIDENCE, R.I. — Pennsylvania Auditor General Eugene DePasquale announced the start of a comprehensive performance audit of the Allentown School District.

The audit will include whether the district complied with state sunshine and ethics laws, and a review of its application process for charter schools.

"Media accounts earlier this summer raised serious concerns about the City of Allentown School District's transparency in business dealings regarding charter schools," DePasquale said.

Allentown's Morning Call newspaper reported that the district approved a charter school backed by developer Abe Atiyeh, and that school officials knew about a side agreement with Atiyeh but did not reveal it publicly.

Superintendent Russ Mayo and school board President Robert Smith, both flanking DePasquale at a news conference Monday afternoon, said they would cooperate with the auditor's staff.

DePasquale said the audit will cover July 1, 2012, through June 30, 2015.

Separately, the FBI has been investigating Allentown's city government. Bureau agents seized such equipment as computers and cellphones and other equipment. According to multiple media accounts, agents interviewed several people, including Mayor Ed Pawlowski.

"The city is cooperating fully with the investigation," said mayoral spokesman Mike Moore.

Earlier in August, Reading City Council Francisco Acosta pleaded guilty to conspiracy to commit bribery and other federal charges in connection with an FBI probe still continuing in that city.

DePasquale also announced Monday that his department's audits of school districts will now collect information to determine the possible financial impact of the state budget stalemate on schools. Pennsylvania's proposed $30 billion budget for fiscal 2016 is unsigned and two months late.

Some school districts have had to borrow money to continue operating as the academic year beckons.

"The lack of a state budget is causing administrative uncertainty in schools across the state," said DePasquale said. "I want to know if the budget impasse causes unnecessary expenses for our schools because every available dollar should be going to classroom education, not interest payments."

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.